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Experts: Long-Term Solutions Needed for Ohio’s Exploding Deficit

December 3, 2008

Columbus, OH – Ohio's budget problems are the worst in a half century, but experts say state lawmakers have a variety of options to help stop the fiscal bleeding. According to The Center on Budget and Policy Priorities, the state's fiscal problems will probably go on for at least two years after the current recession ends. Senior Fellow Liz McNichol says leaders should look at long-term solutions.

"They're either going to have to cut spending or raise revenues. Both of these can take demand out of the economy and can further the economic problems and make them worse."

McNichol says the best bet for Ohio right now would be money from the federal government as part of an additional economic stimulus package. Governor Ted Strickland has already sent a letter to president-elect Barack Obama asking for direct aid to the states.

Strickland says Ohio will likely have to dip into its rainy-day fund, which currently has about 750 million dollars in it. McNichol says that would be a smart move.

"Ohio could draw down some of the reserves that it put in place specifically for an economic downturn, and use that money to help balance the budget, rather than cutting spending."

McNichol says leaders also need to consider the tax side of the equation.

"In Ohio, there's a set of tax cuts that are being phased in. Given what's going on with the economy, it may make sense to suspend that phase-in until times get better."

Strickland has previously said the fund should be saved for even worse times ahead. According to the state, in the next two years Ohio will be faced with the most serious downturn in tax revenues it has seen in the past 40 or 50 years.

More information on research from the Center on Budget and Policy Priority can be found at

Mary Kuhlman/Elizabeth Grattan, Public News Service - OH